Demand

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Demand

Back 1

The quantity of a good or service that consumers are willing and able to buy at each given price level in a given time period.

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Effective demand

Back 2

Demand supported by the ability to pay for a good or service

Front 3

Market demand

Back 3

Total demand in a market for a good. It is the sum of all individual’s demand, at each given price level in a given time period

Front 4

Contraction in demand

Back 4

Movement along the Demand curve. Decrease in the quantity demanded caused by price rises.

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Extension in demand

Back 5

Movement along the Demand curve. Increase in the Quantity Demanded caused by price fall.

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Normal goods

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Goods that see an increase in demand when income rises and vice versa. Associated with a positive (+) Income Elasticity of Demand (YED). Can be basic (0-1) eg food or superior (1+) eg holidays

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Substitute goods/Competitive demand

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Goods in competitive demand/Substitutes and act as replacements for another product eg Pepsi & Coke, Vodafone & BT, oil & gas. Associated with a +XPED.

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Compliments/Joint Demand

Back 8

These goods are said to be in joint demand/complimentary to each other. Eg fish and chips, iron ore and steel, bread and butter + tech + accessories.

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Speculative demand

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Demand created when consumers predict positive gain from a certain stock/currency. Buy low/sell high.

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Composite demand

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A good that is demanded for more than one purpose so that an increase in the demand for one purpose reduces the available supply for the other purpose, often leading to higher prices eg supply of land for residential or commercial use.

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Derived demand

Back 11

When demand for one good or service comes from the demand of another good or service eg demand for cars stimulates the demand for steel is derived demand. Often affects factor market

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Supply

Back 12

The Quantity that a producer/seller is willing and able to offer for a sale at a given price in given time period

Front 13

Market supply

Back 13

Total supply in a market for a good. It is the sum of all individual firm’s supply curves, at each given price in a given time period.

Front 14

Contraction in supply

Back 14

Decrease in the Quantity supplied caused by a fall in market price.

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Extension in supply

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Increase in the Quantity Supplied caused by a rise in market price

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Joint supply

Back 16

When the production of one good also results in the production of another ie a by product eg beef & leather, wheat and straw

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Competitive supply

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Goods and services in competitive supply are alternative products that a business could make its factor resources of land, labour and capital. For example a farmer can plant potatoes or maize.

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Substitute in production

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A production that could have been produced using the same resources. Take the example of barley. An increase in the price of wheat makes wheat growing more financially attractive. The profit motive may cause farmers to grow more wheat rather than barley.

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Equilibrium

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A state of equality where demand is equal to supply and there is no tendency for change. Also know as the market clearing price.

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Disequilibrium

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A state of inequality where demand does not equal supply and there is a tendency for change. This results in either excess demand or excess supply.

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Costs of production

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Revenue expenditure - Every running cost of a firm. Eg RM, wages, oil, indirect, Tax-VAT +Duties.

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Inferior goods

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Goods that an increase in demand when income falls or vice versa.